Monday, June 29, 2015

A recent article in the Washington Post reports on a Global Generations Research Survey by Ernst and Young. [Millennials want a work-life balance. Their bosses don't understand why, WP, 5-6-15] The report finds many work long hours. As a consequence they delay having children, discontinue education and struggle to pay tuition for their children. The article contrasts Millennials with older generations where the young expect technology to free them to work productively from anywhere, but the older bosses are “afraid people who don’t come to the office won’t work as hard.”

The article does not mention a prime source of overwork: unpaid overtime. The demand to have employees around warming up a chair to meet the expectations of the boss has a special hypocrisy since it is common now for business to issue laptop computers, cell phones, and Blackberry’s to employees for use away from the office. Using new technology makes staff available for overtime on evening, weekends, or the middle of the night. Few reports suggest business treat these additional hours of work as paid work much less time and a half for overtime required by the Fair Labor Standards Act.

Back in 2003 the Bush Administration quietly rewrote the overtime rules in the Fair Labor Standards Act. In theory working more than forty hours a week is entitled to pay at time and half the regular pay rate. The Fair Labor Standards Act rules start out with the time and half rule, but they are followed with pages and pages of exceptions that make it easy for management to avoid overtime pay whenever they want.

Three people working forty hours a week equal two people working sixty hours a week, but management pays less for the two when overtime rules allow unpaid overtime. The abuse violates more than the overtime rules because the Fair Labor Standards Act requires at least regular pay for time worked in all cases. Overtime rules exempt millions of America’s executive, administrative, professional, computer, outside sales employees, motion picture employees, and other more narrowly defined occupations from overtime pay, but quite often they work overtime hours for free. Millions confront regular pressure to donate hours of work to their employers while others looking for work find that difficult to do with others working for nothing.

The Code of Federal Regulations sections known as 29 CFR 541 governs overtime rules. The rules run over 15 thousand words after the Bush Administration revisions. The revisions make it possible to avoid overtime pay for almost any office and professional work as long as an employee receives a salary equal to or greater than $455 a week, or $23,660 on an annual basis. Notice that any employer has authority to pay by the week or pay by the hour to fit the regulations as they choose. In practice it turns out weekly, monthly or annual pay makes it easy to forget the total of hours worked.

The long detailed wording in the regulations allows an employer to define or adjust duties to meet the regulations. The wording for administrative employees explains that any employee employed in a bona fide administrative capacity who is “compensated on a salary or fee basis at a rate of not less than $455 per week, exclusive of board, lodging or other facilities, whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers, and whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance” can be exempt from overtime pay.

The regulations describe ways that discretion, independent judgement, and matters of significance might occur and then by changed by higher ups in order to exempt an employer from overtime pay. The regulations read “The exercise of discretion and independent judgment implies that the employee has authority to make an independent choice, free from immediate direction or supervision. However, employees can exercise discretion and independent judgment even if their decisions or recommendations are reviewed at a higher level. Thus, the term ‘discretion and independent judgment’ does not require that the decisions made by an employee have a finality that goes with unlimited authority and a complete absence of review.”

The Obama Administration, now well into a second term, has finally proposed amendments to the overtime rules. They want to raise the salary cap for overtime exemption from $23,660 to $52,000. Business opponents of the change worry and fret to Congress that the new law will cause more lawsuits.

Jamie Richardson, vice president of White Castle Restaurants, told Congress “The new regulations will only result in more complicated laws, and eventually more lawsuits.” He means that raising the threshold for exemption will give financial incentive for more people and groups to challenge the vague terminology used to avoid paying overtime since the Bush Administration amendments went into effect in 2004.

Lawsuits are already on the rise the government’s GAO (General Accounting Office) reports because more employees are tired of employers who expect them to be available to answer emails and cell phones out of business hours on weekends and evenings.

Some like Ryan Shaw, quoted in the Millennial article above, have taken the work hours issue one step further. If they can be expected to work part of the time away from the office then why not all of the time. Since his work was over the Internet and on computers he demanded to leave his employer’s home base in Los Angeles and move to Florida and do his work from there based on a salary disconnected from work hours. Now his work depends only on what he does and not how he does it. Some employers have a hard time recognizing work for what it is; they want control over time.

It’s hard to defend rules that keep employees at work for free. As the Obama Administration moves into its final years, it is about time they did something for working Americans. The proposed rule changes make changes in the right direction; the only question is why so little, so late.

Wednesday, June 17, 2015

Gary Krist, City of Scoundrels: The 12 Days of Disaster That Gave Birth to Modern Chicago, (New York, NY: Crown Publishers, 2012), 273 pages.

Students and scholars of American history will remember how 1919 turned into a post war nightmare of bombings, strikes, riots and violence. The year started with the Seattle general strike. Random bombings started in February and continued around the country. There were the summer race riots, the worst one in Chicago, the fall strikes of the Boston police, steel workers and coal miners. The first raids of A. Mitchell Palmer’s red scare took place in November.

In City of Scoundrels, Gary Krist narrates the 1919 life and troubles for Chicago with special emphasis on twelve days from July 21 to August 1, 1919. The opening prologue narrates a burning exploding Goodyear blimp, the Wingfoot Express, that fell into the central court of the Illinois Trust bank in downtown Chicago on July 21. Bank employees were finishing their workday when the flaming mass dropped literally onto their heads, killing twelve and wounding many more.

Part I follows with eight chapters of background history and events of Chicago from January 1, 1919 until the July 21, 1919 crash of the blimp, which Krist assures readers was a miner mishap compared to what was coming. Chicago politics dominate these early chapters with a detailed account of Mayor Big Bill Thompson’s 1919 campaign for a second term and his rivalry with Illinois Governor Frank Lowden.

Krist mentions events and careers of a number of famous or notorious people with Chicago connections like attorney Clarence Darrow, journalist Ring Lardner, poet and journalist Carl Sandberg, black activist Ida Wells-Barnett, and the new Chicago White Sox manager, “Kid” Gleason.

Discussion includes the newspaper rivalries of the Chicago Tribune and its editor Robert McCormack with the Chicago Daily News and its editor Victor Lawson. Bombings in black neighborhoods and the death of Ernestine Ellis foreshadow the race riots to come. Krist had access to several diaries, which helped him give readers a feel for the Chicago social life of the era that includes discussion of the 1919 new years’ eve celebration and the onset of prohibition.

Krist titles part II, Crisis. It narrates four crisis sprinkled through ten chapters, one chapter for each day starting with Tuesday, July 22 and so on until August 1. Part II picks up the aftermath of the blimp crash, the abduction and murder of a young girl named Janet Wilkinson, a citywide transit strike, and south side race riot.

The Blimp crash brought hearings with charges and counter charges that open part II. The best quote for me came from a Chicago Evening Post editorial. The crash “is due, as so many other disasters are due, to the American habit of taking no preventive action till the disaster as occurred.” Still true I would say.

The blimp crash and its aftermath are one thread through recurring narrative of the four crisis. Krist covers the Janet Wilkinson case in great detail: the disappearance, suspects, arrests, interrogation, a confession, the trial, and execution by hanging, but over half of the 100 plus pages of part II narrate the riots and transit strike which occur on the same July days.

Readers confront the extraordinary violence and bitterness of the riots and the determination of the black community to fight back. Many in the black community served in the armed forces and fought in France during World War I. Narrative highlights the role of white youth gangs in the violence. Like the St. Louis riots before it arson wiped out whole neighborhoods and spread to downtown areas.

Readers will have to evaluate the political and personal rivalry of Mayor Thompson and Illinois Governor Frank Lowden, who acted as competitors rather than allies in spite of the riot. Narrative describes how Mayor Thompson succeeded in keeping Governor Lowden from calling out the National Guard until the Mayor decided it was time on the fourth day, after most of the 23 blacks and 15 whites killed in the riots, were already dead.

Four chapters and an epilogue cover the post riot period from August 1, 1919 through the end of 1920. Much of it recounts the continuing rivalry of the Mayor and the Governor. The Mayor was determined to sabotage the governor’s plan to end the transit strike. The 1920 Republican National Convention was in Chicago and Mayor Thompson had control of key Illinois delegates he used against one of the presidential front runners: Illinois
Governor Frank Lowden. The epilogue follows the major characters in the narrative with a “where they are now” wrap up.

It should be no surprise journalist Krist writes smooth journalistic narrative. The book makes easy reading with sources well documented and a useful and varied bibliography. There are also some fun black and white pictures of the people we meet in the book.

The title of the book, City of Scoundrels, fits for a book length account of grimy Chicago politics and berserk violence, but the sub title, the 12 days of disaster that gave birth to modern Chicago, doesn’t fit as well for me. It could be he means modern Chicago still lives by the me-first principles of “Big Bill" Thompson. I took the mention of the 17 year old Richard J. Daley as a member of one of the white street gangs to be a hint in that direction, but Krist doesn’t follow up too well with what he means by modern Chicago. After you finish this book you might feel better if you just think about Chicago as the windy city!

Monday, June 8, 2015

The Inflation rate for 2014 was low at 1.62 percent, but generally more than dollar wage increases. America has 26 occupations with at least a million people employed in 2014, which the Bureau of Labor Statistics reports have total employment of 50.5 million. Among the 26 occupations 18 of them had a decrease in real wages; eight had an increase, but the highest increase of the 8 was only .58 percent.

Occupations with lower buying power for 2014 include jobs from management, finance, education, health care, sales, office administration, maintenance and repair, manufacturing and transportation. One of the 26 occupations mentioned is in management: general and operations managers. Its percentage increase in median wages from 2013 to 2014 was .87 compared to the inflation rate of 1.62 percent. If the 2013 median wage of $96,460 for general and operations managers increased by the rate of inflation through 2014 it would be $97,994.31. Instead it is $97,270, a -.74 percent decrease in the real wage.

Accountants and auditors had 1.2 million employed in 2014 with a reported 2014 median wage of $65,940, more than the 2013 median wage of $65,080, but not enough to keep up with inflation. Buying power declined by -.3 percent.

Elementary school teachers had 1.4 million employed in 2014 with a median wage of $54,120, more than the 2013 median wage of $53,540, but real wages declined -.62 percent as a result of inflation. Registered nurses had 2.7 million employed with a 2014 median wage of $66,640, the 2014 increase did not keep up with inflation and registered nurses had a -.97 percent decrease in buying power for 2014.

America’s two biggest occupations are retail salesperson with 4.6 million jobs and cashier with 3.4 million jobs. For retail salespersons the percentage increase in median wages from 2013 to 2014 was 1.18 percent compared to the inflation rate of 1.62 percent. If the 2013 median wage of $21,140 for retail salesperson increased by the rate of inflation through 2014 it would be $21,482.94. Instead it is $21,390, a -.43 percent decrease in the real wage.

For cashiers the median wages from 2013 to 2014 were up .53 percent compared to the inflation rate of 1.62 percent. If the 2013 median wage of $18,960 for cashiers increased by the rate of inflation through 2014 it would be $19,267.57. Instead it is $19,060,
a –1.08 percent decrease in the real wage.

Comparing other years than 2013 with 2014 can give a more complete picture of wage changes. For example, with accountants and auditors the real wage declined from 2013 to 2014, but comparing 2000 wages with 2014 looks much better. For accountants and auditors the 2000 median wage of $45,380 would need to increase to $60,687.98 in 2014 to keep up with the rate of inflation through 2014. Instead it is $65,940, an 8.65 percent increase in the real wage for the 14 years.

For accountants and auditors the decline from 2013 to 2014 looks like a temporary set back in a general upward trend of real wages. In contrast for cashiers real wages are down in 2014 compared to any year of the last 15 years. Median wages adjusted for inflation were down 1.08 percent from 2013 to 2014, down 2.56 percent from 2012 to 2014, down 3.77 percent from 2011 to 2014, down 5.1 percent for 2010 to 2014, down 4.12 percent from 2000 to 2014. For cashiers the 2000 median wage of $14,460 would need to increase to $19,879.23 in 2014 to keep up with the rate of inflation. Instead it is $19,060, hence the 4.12 percent decline.

None of the major occupational categories escaped a decline in wages compared to inflation. In the 34 managerial occupations 13 had real wage declines for 2014 over 2013. However, 53 percent of those employed as managers lost buying power including all of those in education administration.

Food preparation and serving related occupations had the broadest losses with 16 of 18 occupations losing compared to inflation, or 98 percent of food service and restaurant jobs out of a total of 11.9 million in food service occupations losing ground on inflation. Cashier and retail salespersons are two sales occupations, but 14 out of 22 sales occupations show a real wage decline where 85 percent of jobs in sales lost buying power because wage increases did not keep up with inflation.

In health care 26 out of 62 occupations showed a real wage decline. Because some of the more important jobs like registered nurse show real wage declines, almost 73 percent of health care jobs did not keep up with inflation from 2013 to 2014. Computing occupations did relatively well, but some had real wage declines. Web developers had a 2013 median wage of $63,160, but needed to increase to $64,184.60 to equal the rate of inflation through 2014. Instead it is $63,490, a –1.08 percent decrease in the real wage.

The data used here comes from the Occupational Employment Survey of the Bureau of Labor Statistics. It offers a comprehensive and consistent method to survey and compare wage data. It is not infallible, but it shows broad and troubling losses in buying power for millions of wage earners.

The past year was a good year for jobs with 3.1 million new jobs for the 12 months ending December 2014. The press and other media discussed the new jobs as a good thing, generally without reservation. However, stagnant or falling wages encourages new hiring in the short run and so the new jobs went with stagnant wages. Millions more work but their jobs contribute to wage and income inequality. Productivity, output per hour of work, continues to rise. Wages need to rise by the amount of inflation plus at least the annual increase in productivity to be a good year for wages. More jobs are good, but a good year needs more jobs with more buying power. It did not happen in 2014. Maybe another year?